Dental practice transitions can be among the most exciting, challenging, and rewarding experiences in a dentist’s career. First, however, you must make the right decisions at the right time.
Whether you’re considering selling, a DSO, hiring an associate or a partner, or combining with another firm, there are many things to consider.
Identifying the Seller
Whether you are selling your practice, adding a dentist to your staff, or planning to retire, a smooth transition is essential for you and the buyer.
A well-planned and thoughtful dental practice transition can make the difference between a profitable sale and an unpleasant ordeal.
Regarding dental practice transitions, you must first identify the seller and the buyer.
You can’t do this alone, so hire a professional who understands the business side and the legal or financial issues that may arise during a transaction.
You’ll also want to consider the practice’s location, patient base, and reputation. Finally, tour the office and review all aspects of patient flow, billing, equipment, scheduling systems, and software.
Identifying the Buyer
Identifying the buyer is among the essential steps in any dental practice transition. The type of buyer you choose can significantly impact the outcome of your sale.
Several types of buyers exist, including solo practitioners, corporate entities, and associates. Each of these has its advantages and disadvantages.
The most common type of buyer is a first-time dentist who wants to own their practice. They are typically 5-10 years out of dental school, have worked as an associate in extensive training, and are ready to take the next step in their career.
Valuation of the Practice
Valuing the practice is an essential first step in a successful practice transition. It helps determine how much money the sale will result in for the seller and the buyer and allows for financial planning and exit strategies.
The valuation process should address various factors to arrive at an accurate figure. These include patient and area demographics, equipment, staff, financials, and growth potential.
This information is also essential for lenders who provide financing for practice acquisitions. It should be analyzed by trusted advisors familiar with the specific aspects of a dental practice that impact value. An accurate valuation is critical for financial planning, exit strategies, and securing loans.
Negotiating the Sale
Whether you’re negotiating the sale of your dental practice or another business, knowing where and how to get the best price is essential. But, of course, you always want to pay more if you can help it.
As part of the negotiations, you must consider many aspects of the deal, including negotiating asset purchase and sale agreements; writing and reviewing non-compete agreements; provider agreements; leases, and more.
A good dentist transition specialist will be able to navigate this process for you so that everything goes smoothly and your practice is sold at the right time.
Negotiating the sale of your practice is a thrilling time, but it can also be stressful. It is why seeking legal representation for a streamlined transition is so important.
Closing the Sale
Closing the sale is an essential part of a successful dental practice transition. It is similar to closing on a house and involves many tasks that must be completed before the deal closes.
Whether selling your practice, purchasing another, or transitioning to an associateship or partnership, a plan must be established to ensure a smooth and profitable transition.
Your team of CPAs, financial advisors, and brokers should work together to ensure your goals are met throughout the sale process and until the close. It includes negotiating the sale price, identifying the right buyer, and providing you have fair market value for your practice.